Return after touching the five-month high.
Fed decision and statement raised the crypto demand, as lower interest rates by year-end seemed more likely. In general, the riskier assets’ demand increased by lowering the risks in the market.
Since inflation has been decreasing over the past months, Fed raised the rates by only 25bps to 4.75%, but late on Thursday and Friday, labor market data was terrific and surprised the investors with a 3.4% unemployment rate. The unemployment rate is historically low, while the participation rate has risen.
The excellent labor market in the US coincided with the upward revision of the International Monetary Fund for global economic growth. According to the IMF World Economic Outlook, the global economy is expected to grow by 2.9% in 2023, which is optimistic for economic recovery. At first look, both numbers were positive for economic growth, but looking deep at the financial condition, it also means higher inflation or at least staying up for longer. With this outlook, interest rates would have to rise further and stay up for longer. Therefore we can expect stronger USD and continuing pressure on risky assets, including cryptocurrencies.
Bitcoin price tested more than five months high, above 24,000 USD last Wednesday, but retreated below $23,000 through the weekend. Moreover, it continues its downtrend over the weekend and the first day of this week. The following support sits at around $22,500. Breaching under the next support will open the doors for 19,000 areas. On the flip side, any return above 23,400 will open the doors for its essential resistance at 25,000 USD.
While Ethereum also had the same scenario and reaction to the economic data, creating support and resistance around $1,600 and $1,750, respectively.